In my earlier piece on the Zignals blog I had talked about the possibility of a rally with a suggested stop 0.5% below Tuesday's close. Well, the S&P finished 0.6% below yesterday's close after failing to hold on to early afternoon gains - busting that play before it had a chance to shine. Based on today's finish it looks like the 1,040 level is going to crack, but there is enough in supporting technicals to suggest a bottom is not far off. ($SPX) via StockCharts.com It was a similar story for the Nasdaq with a bearish engulfing pattern on Tuesday's doji. Watch for a gap below 2,139 which is what bears are pushing for on today's weak close. As with the S&P, technicals are improving and are in the process of setting up bullish divergences. ($COMPQ) via StockCharts.com The Russell 2000 was repelled by the 200-day MA but at the same time didn't collapse to the same degree as the Nasdaq. It finished the day finely poised. ($RUT) via StockCharts.

While market's MACDs remained on a 'sell' it was a better day for bulls. There was higher volume all around which for large caps (S&P and Dow) expressed itself as buying; February & Flash-crash lows remain an area to defend. ($INDU) via StockCharts.com For the Nasdaq the buying was not as strong but the afternoon bullish reversal was evident. ($COMPQ) via StockCharts.com Even returns for Small Caps suggest the 200-day MA could be regained tomorrow ($RUT) via StockCharts.com The recovery in the semiconductors wasn't enough to prevent a MACD trigger 'sell' but tomorrow is a big day with the recent loss of support to battle. ($SOX) via StockCharts.com Tuesday's doji should see some upside follow through for markets but what happens when they get to 200-day MAs will be key. Until then, trading range behavior dominates - bound by Flash-crash lows and 200-day MAs. Follow Me on Twitter Build a Trading Strategy in Zignals; Read how and

Today was the first real volume day since the spike low and was an opportunity for bears to turn the screw on Friday's losses. One key result of Monday's sell off was the reversal of last week's MACD trigger 'buys' for the S&P and Nasdaq - leaving bull traps in their wake - although the Russell 2000 never got its bull trap as no MACD trigger 'buy' was triggered. For the S&P a test of 1,040 looks inevitable for Tuesday; should this break it will not only mean a break of the flash-crash lows, but of the February reaction low too. Should a rally develop soon (and this looks likely given oversold stochastics [39,1]) then one need look to the possibility of a head-and-shoulder reversal top with a right-hand-shoulder c1,150. ($SPX) via StockCharts.com The Nasdaq cracked through its 200-day MA, following on from Friday's "bull trap". Tech experienced a relative strength loss to the S&P, but not enough to change their relative positio

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Market Breadth may be in the bulls' court but the trend continues to move with bears. Technically, for the S&P it was an important break to the downside as stochastics pushed into the lower half of their range; suggesting there is more downside to come before this trend runs its initial course. ($SPX) via StockCharts.com The Nasdaq was another to fall victim to the bearish shift in stochastics, dropping below the important '50' bull/bear mark (the Nasdaq 100 is still on the bull side of the fence). Nasdaq via StockCharts.com Nasdaq Bullish Percents also cracked below rising support, putting them on course for a push down below 40% - currently 51% of Nasdaq stocks are on Bullish Percent 'buys' ($BPCOMPQ) via StockCharts.com While the Percentage of Nasdaq stocks above the 50-day MA remain oversold and in 'buyers' territory. ($NAA50R) via StockCharts.com While the Summation Index is making its way to broadening wedge support (which is also o

It was a mixed day for the markets. For the S&P (and Dow) the 200-day MA ended up the perfect containment for the rally (along with a converged 20-day MA). On the flip side there was a MACD trigger 'buy' as relative strength made a push back towards speculative issues - also bullish. ($SPX) via StockCharts.com The Nasdaq followed the lead of the semicondcutor index and broke through declining resistance with a MACD trigger 'buy' ($COMPQ) via StockCharts.com Small Caps are approaching resistance of a downward channel with the 200-day MA acting as support and the 20-day MA playing as resistance (so far). ($RUT) via StockCharts.com Tomorrow sits on the precipice for bulls; a gap higher in the morning could see a big day as shorts drive short covering and 20-day MAs are once again support. A weak open will keep prices inside the week long range, but even a large down day is unlikely to break this range. If looking to short place stops 1% above 20-day MAs.

Bulls are defending the May spike low not at its lows, but at the spike low's highs. The S&P finished just shy of a test of its 200-day MA, but the 20-day MA is less than 10 points from a bearish cross of the 200-day MA; a big battle is due soon! Volume was light which is a little worrying given the extent of the day's gains. ($SPX) via StockCharts.com The Nasdaq is close to yet another test of declining resistance connecting April and May reaction highs. Each test weakens resistance and with the 200-day MA acting as support the likelihood is for resistance to break. Pending MACD trigger 'buy' too. ($COMPQ) via StockCharts.com The Nasdaq 100 went one step better and did trigger a MACD 'buy' as the index finished just above the 20-day MA. There may also be an early stage break of declining resistance connecting April-May reaction highs. ($NDX) via StockCharts.com Tomorrow offers a great chance for bulls to cement a bottom. Breaking past declining